Asked by
Brooke Turgeon
on Nov 05, 2024
Verified
The United States imports DVD recorders from China and China imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that
A) the United States has comparative advantage in producing computer chips.
B) the opportunity cost of producing computer chips in the United States is higher than that in China.
C) the opportunity cost of producing DVD recorders in China is higher than that in the United States.
D) the United States has comparative advantage in producing DVD recorders.
Comparative Advantage
The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.
Opportunity Cost
The expense incurred by not choosing the second-best option when making a decision or selection.
- Critique the fundamental tenets of global trade by applying the frameworks of comparative and absolute advantage theories.
- Investigate the impact that specialization and trade have on the production and consumption dynamics of goods between countries.
Verified Answer
RS
Learning Objectives
- Critique the fundamental tenets of global trade by applying the frameworks of comparative and absolute advantage theories.
- Investigate the impact that specialization and trade have on the production and consumption dynamics of goods between countries.